Nigeria Raises $2.2 Billion via Eurobond to Address Budget Deficit

The Nigerian government has successfully raised $2.2 billion through a dual-tranche Eurobond issuance to fund its 2024 budget deficit. The Eurobond sale, announced by the Debt Management Office (DMO), attracted significant investor interest, with peak order books exceeding $9 billion, signaling robust confidence in the country’s economic outlook.

The issuance comprised two tranches: a 6.5-year bond priced at 8.5% and a 10-year bond priced at 9.375%. The funds are aimed at financing critical infrastructure projects and supporting the federal government’s economic growth strategies, particularly as the country grapples with fiscal challenges exacerbated by fluctuating oil revenues and subsidy reforms.

To secure the deal, Nigeria engaged three leading U.S.-based lenders as bookrunners. The lenders facilitated the transaction, leveraging their networks to attract global investors. According to the DMO, the success of the Eurobond highlights Nigeria’s ability to tap into international capital markets despite prevailing global economic uncertainties.

The DMO emphasized that this transaction reflects Nigeria’s commitment to maintaining a diversified funding strategy. “The strong demand from investors is a testament to the confidence in Nigeria’s medium-term economic reforms,” the DMO said in a statement.

Critics, however, caution against over-reliance on external borrowing, citing concerns about Nigeria’s rising debt profile, which could strain future debt servicing capabilities. Nonetheless, officials argue that the Eurobond issuance aligns with the government’s fiscal responsibility framework and remains within acceptable debt-to-GDP thresholds.

This marks Nigeria’s return to the international debt market after a brief hiatus, further reinforcing its strategy to blend domestic and foreign funding to meet budgetary requirements. Analysts expect the funds to alleviate immediate fiscal pressures while fostering investments in critical sectors like transportation, energy, and healthcare.

Observers note that while the bond issuance provides much-needed liquidity, sustained economic growth will depend on prudent management of the proceeds and successful implementation of fiscal reforms.